Families cut spending on entertainment, charities in 2013

Average consumer spending fell in 2013, its first drop in three years, as cautious families cut expenditures on restaurants, clothing, entertainment, alcohol and tobacco, and slashed charitable contributions, according to government data released Tuesday.

Last year, total average expenditures by families, singles and other “consumer units” hit $51,100, down 0.7% from 2012′s tally of $51,442, as income “edged down,” the U.S. Labor Department reported. Meanwhile, spending rose for necessities, such as housing and health care.

Of note, the annual spending tallies aren’t adjusted for inflation. It’s unusual to see a year-to-year drop — there have been just three declines in the past 25 years, and all took place after the U.S. began to emerge from the most recent economic downturn.

Looking at trends since 2009 (the recession ended in June of that year), certain families have been a bit looser with their wallets than others. Spending for the highest income quintile in 2013 was up about 5.3% from 2009, two percentage points faster than growth for families in the middle.

“Solid spending increases among the top income earners have masked struggles for large parts of the population,” Harm Bandholz, chief U.S. economist with UniCredit Research, wrote in a research note.

Last year average household spending by the highest income families hit about $99,200, compared with about $94,200 in 2009. Meanwhile, spending by those in the lowest income quintile reached $22,400, up from $21,600 in 2009.

Economists have been concerned about recent weakness in retail sales, and say consumer spending in the second half of this year may slow down. While the economy has seen a nice pickup in employment this year, weak wage growth may be holding back consumers.